Lexington, Mass.: another muni candidate

Decade-long effort remains underway, despite roadblocks

Boulder, Colo. has been "lawyering up" in anticipation of doing battle with Xcel Energy over the city's interest in forming a municipal utility.

Last week, Boulder announced it had selected a law firm to deal with the Federal Energy Regulatory Commission (FERC), which would referee the value of Xcel's Boulder-related assets, for which Boulderites would have to pay. Just prior to that move, Boulder had hired a different law firm to deal with "potential" condemnation proceedings, should Xcel elect not to sell its Boulder assets to the city. (Few believe that Xcel will willingly sell its assets and kiss Boulder goodbye, as that account is said to bring in $100 million annually in revenue.)

But another long-running municipalization effort has been percolating for a decade in Massachusetts, driven by locals who compared rates and reliability for the state's 41 municipal utilities and the region's large investor-owned utilities and found the latter wanting.

Starting ten years ago, the Massachusetts Alliance for Municipal Electric Choice has promoted changes to archaic state laws over a century old that would modernize the state's statutes and allow a clearer path to municipalization, should a Massachusetts city or town decide to pursue it.

This effort got a major boost last fall when Hurricane Irene-turned-tropical-storm struck the region, followed by an early snowstorm that wreaked havoc on tree limbs that downed power lines, in a familiar scenario. Whereas the state's investor-owned utilities took up to a week to restore power in a well-publicized situation, the state's municipal utilities were back online in days, according to local reports.

Obviously, that's a general statement and the proponents and opponents of change in Massachusetts are busy arguing the issue. We know that scale in the form of hundreds and thousands of miles of power lines can bedevil a large organization. But proponents of municipalization in Massachusetts argue that they have the metrics to bolster their position, such as the fact that the number of linemen per resident is significantly higher among the state's munis and the latter's customers pay significantly lower rates than at the region's IOUs. Apples to apples comparisons of outage data is difficult to create, because munis aren't subject to reporting metrics similar to IOUs.

Thus a battle over municipalization has been joined. And it gets rejoined every two years because any bill not passed by the state's legislature must be reintroduced. The bill to streamline and modernize the municipalization process has been filed five times in 10 years. (Do the math.) The mechanisms for the bill's failure over time appear to vary. But the bill's preliminary passage by one Massachusetts joint committee last month contained mysterious language suddenly making significant demands on local munis—a provision certain to doom its passage by the very communities that have already municipalized.

I've painted this issue today in broad strokes, because there are several parties involved—local activists bent on enabling their communities to determine their own energy future, IOUs that want to protect their bread-and-butter and have their own arguments against municipalization, a lineman's union that believes further municipalization would hurt, not help, employment and others, including a raft of legislators, each with a campaign money trail and their own parochial interests. No need to call anyone out until I've plumbed the depths of this issue.

Oh, and one other thing. In a story reminiscent of the debacle that PG&E created for itself when it fought a ballot initiative for municipalization in California, the New England Center for Investigative Reporting put out a story last October, "Power Play: Utility Companies Pull Plug on Competition," that documented the massive lobbying dollars that the region's IOUs spent to defeat the municipal power bill. Give it a read.

And then ask yourself why we've written extensively for the last two years on the miserable level of trust between ratepayers—I mean, "customers"—and publicly traded utilities.

Comments

Excellent

- Feb 21, 2012 - 1:25 PM

My thanks to both (so far) contributors today.

It's interesting that the conversation has begun to turn to local empowerment for many reasons.

Richard Pate cites data reflecting increased outages and one possible driver -- deferred maintenance (and cost savings) that comes home to roost during extreme weather events -- and that underscores that scale can be the enemy, where once it was the power industry's driver.

This can be said to encompass the notion of "Big Green," that is, the notion that huge transmission projects (physically and in terms of cost) are needed to move renewable energy from resource areas to load areas. With local empowerment, which combines EE, RE, DER and cooperative models within a community, we're on the verge of solving big problems. The prevalence of solar PV in Germany, which does not enjoy the sunshine that, say, Denver does, should undercut the argument for massive transmission corridors. The effort to develop local solutions, as John Cooper suggests, and I believe he's right, will run parallel to utilities' efforts to maintain their footing and head everyone else off at the pass.

Indeed, Big vs. Local is shaping up to be one of the 21st centuries power shifts in many areas of society; not surprising to find it in the power sector.

I think that's why you see, for instance, an enlightened utility such as San Diego Gas & Electric cooperating with the microgrid at the University of California San Diego, whereas elsewhere in the country, you see pure utility hostility to microgrids.

Americans have always put their sweat equity and money into opportunities and with the glacial pace of change among utilities and their regulators, I believe local empowerment initiatives in various forms (and whatever you choose to call non-utility solutions) will be the story of the decade now unfolding.

The Rise of Community Energy

- Feb 21, 2012 - 9:35 AM

Phil, I greatly appreciate your coverage of these efforts by communiities to find their voice in the emerging energy debate. Currently, most city leaders who have a beef with energy in their communities find municipalization to be the logical route: "The IOU is not meeting our local needs - we could do a better job."

Marin, Boulder, Lexington - even consumer resistance to smart grid - share a common desire by local communities - consumers and their leadership - to exercise local control over their energy futures. The term Community Energy captures this sentiment and is broader than Municipalization. Community Energy includes distributed energy resources (energy efficiency, energy management systems, PV, micro turbines, micro wind, EVs, energy storage, microgrids), as well as new business models that promote collective energy planning and action.

Where a Smart Grid focuses on modernizing utility infrastructure, and a Smart Cty focuses on modernizing municipal infrastructure, a Community Energy effort focuses on local enagement to to integrate real estate with infrastructure and community life to create Smart Districts, a complementary path to both Smart Grids and Smart Cities.

Another Point Of Interest in Massachusetts

- Feb 21, 2012 - 9:35 AM

Another interesting point in the Massachusetts events is the growing concern about grid maintenance. The municipalities have a higher number of linemen per 10,000 customers than do the IOUs’ and the state has seen a quadrupling of outage frequencies involving large numbers of customers over the last 5 years.

John Sterman, a professor at the MIT Sloan School of Management, has been quoted as saying “The US electric grid is failing. From 1991 to 1995 there were 41 outages affecting more than 50,000 customers each, but nearly 350 from 2005 to 2009”.This like the growing outage issues in Illinois are causing states to take a much harder look at utility resource practices.More people are raising the question if utilities are sacrificing maintenance to save cost and if the results are starting to catch up to them.

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